TheRetirement Gamble

TheRetirement Gamble

Question1

Theepisode on retirement gamble by PBS shows how the charges, costs, andkickbacks to brokers help Wall Street show high profits while leavingthe pensioners’ future bleak and uncertain. The film tries toestablish the best-placed entities to handle pensioners’ money andmaximize their returns on investment.

Itis notable from the documentary that half of Americans cannot savefor their retirement. A third of them state that they have noretirement plan in place. In the past, companies guaranteed employeesmonthly pensions from when they retired till their death. Americancitizens now have to plan on their own for their retirement. Thestock market and housing crisis made millions of Americans borrowagainst or depleted their 401(k) (defined contribution pensionaccount). Many of those interviewed in the documentary indicatedtheir plan to work longer (more years than they had anticipated) toaccumulate more funds. The funds will help them when they retire.Retirement Gamble is an eye opener more so on key fees charged by themutual fund managers.

Someof the people interviewed had no idea how some investment plans wereunder their accounts. The advice given to contributors isoverwhelming, and most are not able to select the best portfolio. Thefilm show that having a financial adviser who acts as a fiduciary iskey to being sure that one gets the best and not just a suitableretirement plan.

Question2

Itis important to share money decisions with children so as to helpthem build their mathematical and money skills at an early age.Children are quick to learn the symbolic value placed on money.Learning about money will helps them in future as they interact withpeople and they handle various funds. When kids acquire moneymanagement skills, they can apply them as they grow up. Children areteachable and can comprehend the lessons parents provide. They canthen apply them in current and future financial decisions.

Whenparents share money decisions with children, they also make themaware of the concepts of money. The children get to know that humanneeds cannot be completely satisfied and that resources available tohuman beings are limited. Efforts geared towards the achievement of afamily’s financial goals become easier when all the membersunderstand why some decisions are necessary. It is important to sharemoney decisions with children earlier enough to make them appreciatea family’s financial position.

Question3

TheFederal Reserve of the United States ordinarily adjusts the federalfund`s rate to regulate inflation and stimulate economic growth. Anychanges to the interest rates typically affect various economicpointers which include the bond and stock markets (Zacks InvestmentResearch, 2015). The Federal Reserve controls inflation by varyingthe sum of money moving through the financial system. By increasingthe interest rates, the borrowing costs for both businesses andindividuals rise thus limiting the overall spending pattern of theconsumers (Zacks Investment Research, 2015).

Adecrease in consumer demand means that buyers purchase fewer goodsand services thus causing reduced corporate earnings. Rising interestrates typically cause the stock prices to decline in the short run.However, some experiences have shown that rising interest rates causethe late upturn in stock prices over a period. An example is when theshare prices rose in the mid-1990s up to mid-2000s despite the factthat the Federal Reserve had raised the interest rates continuously(Zacks Investment Research, 2015).

Question4

Afinancial adviser is a term used to describe an individual in thebusiness of giving guidance and advice that relates to the stockmarket, bond market, mutual funds, and securities. A financialadviser provides investors with the options available if they so wishto put their money in any investment plan (Zacks Investment Research,2015). The law requires advisers managing portfolio securities worth$25 million or more be registered at the Securities and ExchangeCommission.

Astockbroker is a legal term that is used to refer to an individualwho manages share transactions on behalf of his or her clients. Thetransactions involve the buying and selling of stocks and securitiesusually at a registered Stock Exchange. The stockbrokers usually workwithin brokerage firms, but can also operate independently dependingon their mode of business. When an individual wants to buy or sellsecurities, a stock broker communicates their intention to the stockexchange floor and links them to a willing buyer or seller.

Afinancial planner is an individual who establishes, develops and putsin place a financial roadmap for his or her clients (Zacks InvestmentResearch, 2015). The roadmap helps the clients’ to maximize wealthby selecting the best investment options. A financial planner maydesign a variety of strategies and policies not limited toprofitability but also covering the areas of taxation, corporategovernance or payables, and receivables management. The key role of afinancial planner is to assist individuals ascertain their currentposition, and have a roadmap to follow so as to achieve their desiredgoals or results.

Question5

Thearticle on the working savings plan by Olen and Harold Polack offersvarious benefits to the reader. The plan educates an individual on arealistic way of spending and saving. The knowledge acquired from itis very useful. It helps one monitor spending. One learns how to keeptrack of their money so that they know what they earn and how toallocate it among various expenses. It also assists an individual toassess his or her spending and to eliminate unnecessary expenses.

Thearticle also helps people to refine their expenses since they canevaluate their spending over a period thanks to the knowledgeprovided by the article. One gets to calculate how much he or shespend on various item and whether the spending on particular itemscan be adjusted, either upward or downward. Also, one acquiresknowledge on how to budget. This knowledge assists one to makeeffective plans and to live within budgetary limits. Planning alsoassists an individual to differentiate the significant expenses frominsignificant ones, monitor them and make adjustments as required.

Thearticle also teaches one how to set aside money for entertainment bybudgeting and following a strict financial plan that enables anindividual to allocate money for all activity. Finally, theknowledge, in the article, on coming up with an automatic savingsplan, with bank accounts for different purposes helps an individualto separate income. Separating income helps one avoid the temptationof putting money for various purposes in a single account which canbe easily accessed.

Reference

Zacks Investment Research. (2015). What an Increase in Interest Rates Causes to Investments. Retrieved from Zacks: http://finance.zacks.com